The "easyCouncil" model of no-frills local services is set to go on trial this spring after the High Court announced it will review a £320m services contract due to be outsourced by the Conservative-controlled London Borough of Barnet.

The case is being brought by Maria Nash, a 67-year old disabled resident who says she fears for her life if support services are removed if and when the private outsourcing firm, Capita, takes over. The judicial review of the legality of the contract means the signing of the deal, which was supposed to happen at the end of January, has been delayed. Capita was to take over services in April – just ten days after the hearing is expected to conclude in late March. It declined to comment on the legal battle.

The judicial review at the Royal Courts of Justice is the sternest test yet of radical council reforms being tested around the country. Councils last year faced cuts in their spending budgets averaging over 10% caused by Whitehall cuts and declines in council tax revenues, according to the Institute of Fiscal Studies.

Barnet's describes its proposed reforms as "major and unprecedented". The outsourced customer services and back office contract would be worth £320m over 10 years and the council has estimated it could produce savings of up to £125m. Later this year it plans to outsource a £290m contract for development and regulatory control services. The proposals have already sparked widespread protests and political upheaval.

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On Tuesday, the council debated a possible referendum on the contracts after a 8,000 signature petition demanded one. Last year, the council leader Richard Cornelius survived a vote of no confidence, the chief executive resigned unexpectedly and two Conservative councillors rebelled. Brian Coleman, a former adviser to the London mayor Boris Johnson, said "the council needs to dump this flawed scheme" while Sury Khatri complained "we do not have a mandate".

Nash's case is that neither the Capita contract, nor the planned £290m contract to outsource planning, cemeteries, highways, environmental health and other services, are legal because the council has failed to consult on the decisions, has failed to meet its public sector equality obligations and based its decisions on "grossly inadequate assessments of the relative merits and risks involved and hence are unreasonable and amount to a breach of its fiduciary duty."

Nash is a former holistic therapist who now suffers from arthritis, osteoporosis and diabetes and relies on public funding of £2,000 per month to pay for personal care assistants to help her wash, dress, eat and go shopping. She said she was "terrified" by the extent of cuts to services she uses and complained she needed more information from the council.

"I can't sleep at night for worry and my pneumonia, which should have passed, I can't get rid of," she said."The moment Capita get hold of this contract, I am not going to be able to get the help I need. I will vegetate or be left to die. I am not going to be able to be independent."

In papers submitted to the court, she argues that by the time the 10-year outsourcing contract expires, the council will be so reliant on the private companies it "will no longer possess the knowledge and competence to act as a local authority". She says the reforms will hammer the local economy.

"If our streets aren't clean or the pavements aren't accessible, parking is not available then the people that suffer are not only the residents, but businesses that rely on the residents to be able to go and shop and use their services," she said.

"If the disabled or elderly aren't able to get out of their houses that will have a huge impact on the way they live and function and if they are not independent and safe that causes huge problems not just for them but their family, friends and the community. It is a downward spiral."

Barnet is planning to contest the case vigorously and is understood to be confident its policy will survive intact.

"I am delighted the court have fast-tracked this process and given us the earliest possible hearing date," said councillor Dan Thomas, cabinet member for resources. "The new support and customer service organisation contract will save the taxpayer £1m a month. Barnet Council is keen that we start to make these savings as quickly as possible."

Alison Moore, leader of the Labour group, said residents were outraged at the lack of consultation. "Moving to a council that commissions most of its services from someone else is a fundamental change in the way local services are provided, and it will have an impact on local people, including the most vulnerable," she said.

• This article was amended on 5 February 2013. The photo caption originally stated that Maria Nash is suing the council for outsourcing social care services. Her case is actually over the outsourcing both of support services and of development and regulatory control services because she is concerned about the impact of these on care services. This has been corrected. The article itself has also been amended to include the estimated amount of savings the council expects to make by outsourcing support services. The article was further amended on 7 February to remove a lower estimate for the expected savings, £41m, which Barnet council says was an early conservative estimate calculated before contract negotiations were complete.